NEW DELHI: India’s biggest energy companies are moving beyond their roots in fossil fuels to invest in renewables, backing Prime Minister Narendra Modi’s goal to build up alternatives to the most polluting forms of energy.

Indian Oil Corp., a prominent refiner, along with Oil India Ltd., are working to build a 1-gigawatt solar farm in Madhya Pradesh, according to the state agency responsible for implementing energy policy. The oil companies join India’s largest conventional electricity generators like NTPC Ltd. and Tata Power Co., which are aiming to be the biggest players in clean energy.

India’s biggest oil explorer is also getting in on the game.

“We already have some wind capacities, and now we want to position ourselves big in solar,” said Dinesh Kumar Sarraf, chairman of Oil & Natural Gas Corp. “Investments in renewable energy are not for mere demonstration, but also because of business reasons. We are working towards giving renewables a reasonable share in our overall business mix.”

Modi’s support, along with a plunge in the cost of wind and solar technology, is making more renewable projects economical to develop. That’s making clean energy a bright spot in an industry where state power retailers are struggling to pay their own bills after amassing 2.5 trillion rupees ($37 billion) of debt.

“More renewables than coal power will be built in Asia over the next 25 years, and most of it will be built by these big conventional power companies,” said Justin Wu, head of Asia and Pacific for Bloomberg New Energy Finance in Hong Kong.

The Indian companies are catching up to counterparts in Europe and Asia, where big energy companies have already moved into renewables. China Guodian Corp., the nation’s fourth-biggest conventional power company, is the largest wind-asset owner in the world through unit China Longyuan Power Group Corp. Other leading renewables developers include utilities Enel SpA of Italy, Iberdrola SA of Spain and Finland’s Fortum OYJ.

Renewables Opportunities In India, companies are just starting to recognize the opportunity.

Tata Power, one of the country’s large private power producers with 7.3 gigawatts of capacity, signed the biggest renewables deal in India last month, acquiring 1.1 gigawatts of clean-energy capacity valued at $1.4 billion from Welspun Renewables Energy Pvt Ltd.

Government-owned NTPC, India’s largest power generator with coal-based installed capacity of 35 gigawatts, intends to transform itself into the largest green power producer in coming years, according to its website. NTPC and its power-trading subsidiary, NTPC Vidyut Vyapar Nigam Ltd., also act as the buyers for most solar auctions sponsored by the central government.

Another private coal-based power project developer, RattanIndia Power Ltd., told Bloomberg earlier this year that it’s converting a parcel of land initially intended for conventional energy projects to solar.

Indian Oil is planning to consume part of the clean energy produced for their own refineries and sell the remainder to other public sector enterprises like Steel Authority of India Ltd., said Manu Srivastava, managing director of Madhya Pradesh Urja Vikas Nigam Ltd., the agency that’s implementing renewable policies in the province.

“The state government will provide land to the oil companies for this project and we’re looking at district Chhatarpur for the same,” Srivastava said.

Modi’s Promises Indian Oil said in a statement that the project is in preliminary stages and it’s too early to comment. Officials at Oil India weren’t available for comment.

CLP India, a unit of Hong Kong-listed CLP Holdings Ltd., also has 1.1 gigawatts of renewable capacity either working or being planned in India.

Both local and foreign companies are being drawn by Modi’s promise to support more wind and solar developments through subsidies and auctions of power-purchase contracts. His target is to expand clean energy in India to 175 gigawatts by 2022 from 45 gigawatts currently.

Still unanswered is whether investors are able to profit from their clean energy investments. India’s power retailers are suffering losses, partly because they’re forced to sell electricity below the cost they pay for it. Their reliance on loans and subsidies has made them slower to embrace solar and wind.

“If power distribution companies don’t improve financially in next three years, clean power projects will be in danger of turning into non-performing assets," said Nitin Zamre, managing director at consulting firm ICF International.

Government Goals Even so, Modi has mandated that utilities buy more renewable power to stimulate the industry.

In order to promote renewable energy and energy security, the government has targeted eight percent of total consumption of electricity, excluding hydro power, from solar energy by March 2022 as part of amendments to the country’s tariff policy released this January.

“The fall in the price of clean energy is driving massive capacity build across Asia and that is an opportunity that even conventional energy firms can’t ignore," said Ashish Sethia, head of Asia-Pacific gas and power analysis at BNEF.